Perwakim picketed outside BNM

Perwakim, an association of general insurance agents, picketed outside BNM in protest of the introduction of premium rebates. The premium rebates come into force on 1 July 2009.

A memorandum was handed to Prime Minister's office, the Ministry of Finance and the Ministry of Human Resources.

Source: Business Times

Views on Premium Rebates

Various parties have come forward to express their views on premium rebates:

Fomca

• Welcome BNM's move
• Want the rebate to be extended to life policies as well

NUBE

• In the long run detrimental to consumers, agents and insurance industry
• Agents play a role especially in reaching to the remote areas
• Will cause a huge unemployment problem

PIAM

• Trend is towards diversification of distribution channels
• Increasing demand for agents who could offer a comprehensive financial advisory package
• Customers who are comfortable with and appreciate the services provided by agents will continue to deal through agents

Lonpac

• Agents not affected if they provide good service and are familiar with their products
• Agents can assist in handling claims

Source: Business Times, The Star 1 & 2

BNM firm on premium rebates

BNM is pushing through premium rebates on general insurance policies bought directly from insurance companies, despite a strong protest from insurance agents.

Apparently, the rebates do not apply only to motor insurance policies as previously announced but to other general insurance policies as well. The rebates for non-motor policies vary by type of insurance and are between 5% and 25%.

Insurance agents are encouraged to transform themselves to financial advisors. BNM also said that there were no plans to introduce premium rebates for life policies.

Some statistics:

• 40,000 general insurance agents in Malaysia
• RM4.4 bil premium in general insurance (2008)
• Motor insurance is the largest class with 50% share
• 15% of motor insurance business was direct business

Source: Business Times 1 & 2, The Star, BNM

Perwakim's views on motor insurance rebates

Perwakim, an association of general insurance agents in Malaysia, will meet BNM and PIAM to discuss motor insurance rebates.

Perwakim's views on rebates:

• Detrimental to both agents and customers
• Only benefit insurance companies (no reasons were given on why this is so)
• Will result in retrenchment of staff of smaller agencies

In Malaysia, there are 50,000 insurance agents of which 40% are full time.

Source: The Star

More responses on motor insurance rebate

The recent decision to grant 5-10% rebate to policyholders buying motor insurance direct has resulted in different responses from different parties:

Deputy Finance Minister:

• Poicyholders will continue to use agents if their services are excellent
• This practice is in line with the rest of the world
• The aim is to increase the public's access to insurance
• Also to bring the industry up to speed with various technological advancements
• Remisiers have set the precedent, now you can buy shares direct

Proton Dealers Association Malaysia (Peda):

• It will destroy the automotive eco-system, particularly the dealers network
• Automotive dealers will lose > 20% of their income
• Motor insurance premiums are > RM1 mil per year per dealer agency
• Peda will call for a boycott
• It will contribute to a higher unemployment

EON Bank:

• No impact on its insurance business if Peda calls for a boycott

Source: The Star, Business Times 1 & 2

Mandatory rebates for motor insurance

From July 1, motor insurance can be purchased directly from insurance companies and the commission normally paid to the agents will be mandatorily rebated to policyholders who are the actual owners of the vehicles.

The rebates are:

• 5% in 1st year
• 10% in renewal years

The responses by various parties on the above:

• Agent: livelihood of agents would be affected
• BNM: promote the promulgation of alternative channels
• Federation of Malaysian Consumers Association: agents will have less cross-selling opportunities

Source: The Star